C.S. Swati (CS) (60 Points)
14 May 2011Dear All,
Is there any distribution pattern of OUT OF PROFIT between premium on redemption of preference shares & Debenture Redemption Reserve..
As for instance, I have100 in my hand as profit & need to distribute between above mentioned heads.... so in what proportion it should be distributed.....& my liability is100 each..
Please revert ....
Thanks
Swati
CS Bijoy
(Expert)
(6394 Points)
Replied 25 May 2011
Premimum on redemption of preference is paid out of Securities Premium a/c, but in case of balance is insuficient it can be paid out of profit.
As per section 117 C a debenture redemption reserve is to be created for redemption of debenture which is compulsory.
So there is no distribution pattern, but premium should be given only out of the profit available after transfer to debenture redemtion reserve.
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